Correlation Between LEO Token and Compound

Can any of the company-specific risk be diversified away by investing in both LEO Token and Compound at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining LEO Token and Compound into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LEO Token and Compound, you can compare the effects of market volatilities on LEO Token and Compound and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in LEO Token with a short position of Compound. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEO Token and Compound.

Diversification Opportunities for LEO Token and Compound

-0.48

Correlation Coefficient

LEO Token  Compound

Very good diversification

The 3 months correlation between LEO and Compound is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding LEO Token and Compound in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compound and LEO Token is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on LEO Token are associated (or correlated) with Compound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compound has no effect on the direction of LEO Token i.e., LEO Token and Compound go up and down completely randomly.

Pair Corralation between LEO Token and Compound

Assuming the 90 days trading horizon LEO Token is expected to generate 0.23 times more return on investment than Compound. However, LEO Token is 4.42 times less risky than Compound. It trades about 0.02 of its potential returns per unit of risk. Compound is currently generating about -0.16 per unit of risk. If you would invest  958.00  in LEO Token on December 22, 2024 and sell it today you would earn a total of  14.00  from holding LEO Token or generate 1.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

LEO Token  vs.  Compound

LEO Token

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LEO Token are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, LEO Token is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Compound

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compound has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Compound shareholders.

Pair Trading with LEO Token and Compound

The main advantage of trading using opposite LEO Token and Compound positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEO Token position performs unexpectedly, Compound can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Compound will offset losses from the drop in Compound's long position.

The idea behind LEO Token and Compound pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.